Olympics Hurt London Store Sales as Shoppers Avoid Capital

Next Plc Chief Executive Officer Simon Wolfson said, “It is negative for the two weeks of the Olympics, our central London stores will suffer.” Photographer: Chris Ratcliffe/Bloomberg

Aug. 1 (Bloomberg) -- The Olympic Games is reducing sales
for central London retailers as shoppers and tourists heed
advice to avoid the city, according to the chief executive
officer of Next Plc.

“The effect is definitely negative” in terms of sales,
Simon Wolfson said today in a telephone interview after Next
reported first-half revenue growth that beat analyst estimates
and increased its full-year profit forecast.

Wolfson’s admission came as researcher Experian said a
slump in London store visits since the July 27 opening of the
games persisted in the first two days of this week. The decline
in shopper numbers will disappoint retailers in the city, who
had expected excitement surrounding the games and a related rise
in tourism to help revive sales that are struggling amid the
U.K. double-dip recession and stalling consumer confidence.

“The Olympics were positioned in the long run to be a
boost to the economy and the retail sector,” said Bryan
Roberts, director at Kantar Retail. “But a lot of anecdotes
like Next suggest stores are seeing much lower traffic.”

London is suffering from a “displacement effect,” with
many locals choosing to work from home and Middle Eastern
tourists, typically big spenders over summer, avoiding the city
after warnings from transport authorities of travel congestion
during the games, said Jace Tyrrell, a spokesman for The New
West End Co., which represents 600 retailers in the area.

‘Negative Publicity’

As many as 1 million extra visitors are expected each day
during the games, making 3 million journeys on public transport
in addition to the usual 12 million, according to Transport for
London. Access to the city’s streets is limited during the
Olympics, with 30 miles of Games Lanes restricted to athletes,
officials and the media from 6 a.m. to midnight.

“The negative publicity around public transport has been
very effective, but probably too effective” for the capital’s
retailers, said Kantar’s Roberts.

The number of visitors to stores in West London fell 4.5
percent from a year earlier on July 30 and July 31, after a 10.4
percent drop on July 27, the day of the Olympics opening
ceremony, Experian said today. In East London, where the Olympic
stadium is located, store visits declined 9.6 percent on July 30
and 31 after a 7.2 percent drop on July 27.

“It is negative for the two weeks of the Olympics, our
central London stores will suffer,” said Next’s Wolfson. Online
sales at the U.K.’s second-largest clothing retailer are also
impeded around major events, he said.

Late Boost?

Business in the West End shopping district has shown some
improvement since the weekend, according to Tyrell, though mid-market retailers in particular have been suffering, he said.

Tourists in London for the Olympics will start shopping at
the end of the games, Tyrrell forecast, while the Olympic
“family” of officials and sponsors will be attracted by the
mix of luxury and mid-market brands in the capital, he said.

“We knew it would be a different trading pattern,”
Tyrrell said. “All the hotels are booked up with corporates who
are big spenders.”

To be sure, John Lewis Plc, the U.K department-store chain
which sells official Olympic merchandise, said sales doubled
last week at its Stratford store near the athletics stadium, as
it sold mementos such as toy mascots, key rings and pin badges.
Athletes staying in the nearby village have also been in,
according to store managing director Noel Saunders.

“To make their stay at the Olympic village even more
comfortable, we’ve sold high numbers of door stops, coffee
machines and doormats,” Saunders said.

Next’s Wolfson said the slowdown in central London shopping
isn’t representative of the country as a whole.

“We’re only talking about central London, that’s the only
part that’s being affected,” the CEO said.